White House economist apologizes to Hill GOP

CorbettB. Daly

WASHINGTON (CBS.MW) -- One day after a rare rebuke from the top Republican lawmaker on Capitol Hill, President Bush's chief economist apologized Thursday for comments seen as insensitive to the plight of the unemployed.

"My lack of clarity left the wrong impression that I praised the loss of U.S. jobs," N. Gregory Mankiw, chairman of the White House Council of Economic Advisers, wrote in a letter, released late Thursday, to J. Dennis Hastert, R-Ill., Speaker of the House of Representatives.

"It is regrettable when anyone loses a job. A job loss is always an awful experience, and can lead to hardship for a worker and his or her family," Mankiw wrote in the Feb. 12 letter, adding "I regret that I did not express my views on these issues more carefully."

The letter was prompted after Hastert and other Republicans sharply criticized Mankiw throughout the week for comments made Monday when the White House released its annual report of the president.

Hastert accepted the apology and turned his criticism to the opposition Democrats.

"I appreciate the clarification of Chairman Mankiw. My concern was that Mr. Mankiw left the wrong impression about our agenda. I know that President Bush shares my belief that we need to create a better environment for job creation here in the United States," Hastert said.

"Protectionism is not the answer. Higher taxes are not the answer. More lawsuits are not the answer. In short, the Democratic agenda is not the answer," Hastert added.

Asked about the flap Thursday morning, Commerce Secretary Don Evans said "free trade leads to better jobs in America" and cheaper prices for U.S. consumers in a more efficient economy.

"The global economy continues to become more integrated and more interlinked, which is good long-term. But we must also stay very focused on all of those that don't have a job. It's very important that we have the programs in place to give people the skills, the tools, train them, educate them so that they can be competitive in the 21st century economy," Evans said in a telephone interview from New York before he met with Robert Greifeld, president and CEO of Nasdaq. Listen to Commerce Secretary Don Evans.

Rep. Don Manzullo, R-Ill., chairman of the House Small Business Committee, called for Mankiw to step aside after he heard the comments.

"We don't need people like that advising the president," Manzullo told CBS MarketWatch in a radio interview conducted before Mankiw's letter to Hastert was made public Thursday.

Manzullo could not be reached for comment after the letter was made public.

Bush, for his part, distanced himself from the economist's comments without mentioning Mankiw by name.

"There are people looking for work because jobs have gone overseas. And we need to act in this country. We need to act to make sure there are more jobs at home, and people are more likely to retain a job," Bush said Thursday morning in remarks on education and the economy in Harrisburg, Pa.

In their criticism of the administration, Democrats painted with a broader brush than the Republicans, who separated the economist from the president.

Sen. John Edwards, D-N.C., who is chasing front-runner and Senate colleague John Kerry, D-Mass., for the Democratic nomination for president, charged that the Bush administration officials are not in sync with the economic needs of average Americans.

"These people," the former trial lawyer said earlier this week of Bush and his aides, "what planet do they live on? They are so out of touch."

Senate Minority Leader Tom Daschle, D-S.D., predicted Bush would force Mankiw to join the ranks of other ousted administration officials, including former economic advisor Lawrence Lindsey and former Treasury Secretary Paul O'Neill, who recently cooperated extensively with a journalist on a book critical of Bush's leadership skills.

"They all told the truth publicly about different administration policies and soon after were told their services were no longer needed. So I expect Mr. Mankiw will soon announce he's pursuing new challenges," Daschle said Thursday.

Daschle and other Senate Democrats unveiled legislation that would require companies to disclose and report decisions to lay off 15 or more workers and send those jobs overseas. The firms would be required to report such moves to the Labor Department, state agencies and the affected workers and also provide employees with at least three months advance notice.

Evans said the administration would steer the trade policy debate in the coming months toward a discussion of a "level-playing field" for American workers.

When President Bush took office in January 2001, U.S. nonfarm payrolls totaled 132.4 million. Since then, payrolls have fallen by 2.2 million.

Asked about the administration's forecast that rate of output of American workers would decline sharply this year in order for more than 300,000 jobs to be created on a monthly basis, Evans said the spike in productivity over the past two years is unsustainable.

High productivity is "good for the economy long-term. It does mean higher standards of living, it does mean higher paying jobs, but sustaining 5.25 percent (productivity increases) for the long-term just is not realistic in my view," Evans said, noting that productivity rose at a 1.25 percent rate in the 1980s and at a 2.25 percent rate in the 1990s.

The unusually productivity is one reason the job growth has been slower than the administration had hoped to see, he said.

"With productivity that high, it makes it difficult for robust job creation in the near term. It does mean over the longer term, more jobs, higher paying jobs, a stronger economy, higher standard of living for all the American people. But in the near-term it means that it's tougher to create jobs. But we are creating jobs and we have had good job growth in the last several months," he said, noting that the economy added 366,000 jobs in the last five months, an average of 73,000 per month.

Economists say that 125,000 to 150,000 jobs per month need to be created in order to keep up with population growth of the labor force.

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